The Ministry of Labour and Social Welfare plans to lift the national minimum wage by the end of this year to ensure it reflects the real cost of living.

Acting Director General of the Labour Department, Mr Phongxaysak Inthalath, on Monday said the department was holding discussions with representatives of labourers and employers in order to ensure they set an appropriate new minimum wage rate.

The current minimum wage stands at 290,000 kip a month.

“The current minimum wage was introduced in 2005 and because it is old, it does not reflect the present situation,” Mr Phongxaysak told Vientiane Times.

He said no decision on the new minimum wage had been made yet, because representatives of workers and employers were not able to agree on a rate. Each side was looking to protect their own interests, he said.

Workers want a higher minimum wage, but employers want the rate to remain the same because of fears that higher wages will lead to higher production costs, and reduce the ability of Lao manufacturers to compete in foreign markets.

He also said it would take some time for the two sides to reach an agreement. However, he confirmed the department would try to establish a new minimum wage rate by the end of the year and submit the proposal to the government for approval.

Mr Phongxaysak admits there is a need for the government to consider a new wage rate, as higher living costs and increasing inflation rates mean some labourers are struggling financially.

A labourer representative, Mr Thongchanh Khamphone, said the Lao Trade Union was concerned with the current minimum wage, as increasing living costs meant labourers were unable to save money.

A number of labourers have written to the National Assembly asking for help to improve their living standards.

“We received a letter from the Assembly about the complaints and, as labourer representatives, the Assembly wants us to address the problem,” Mr Thongchanh told Vientiane Times.

Mr Thongchanh said the union had estimated the new minimum wage rate should be more than 500,000 kip a month. The estimate is based on information collected by the trade union, 2002-03 family expenditure figures, business incomes and inflation rates, he added.

“We plan to submit the proposed new minimum wage figure to the government for consideration and approval in the near future,” he said.

He said all sectors concerned must be told that low wages would force Lao labourers to leave the country to work in neighbouring countries such as Thailand, which has a minimum wage of about 800,000 kip a month. Employers claim they pay labourers more than the current minimum rate, noting that labourers who work harder will earn more money.

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